The trend towards reshoring and nearshoring manufacturing operations has been gaining momentum in recent years, and the COVID-19 pandemic has only sped up this trend. Companies are looking for ways to reduce their dependence on far-flung supply chains and bring their operations closer to home to minimize the risk of disruptions.
As a result, real estate developers and investors are increasingly turning their attention to border cities in North America, where demand for warehouses and distribution centers is skyrocketing. These facilities serve as logistics hubs for goods manufactured in Mexico and are located close to the large US market, offering companies a number of advantages.
Mexico, in particular, has become a popular destination for companies looking to establish manufacturing operations. The country offers a lower cost of labor compared to the US, a well-established supply chain network, and is close to major US markets. As a result, Mexico has become a hub for industries such as electronics, medical equipment, and automotive manufacturing.
Institutional investors also note this growing market, with significant players in the logistics real estate industry investing heavily in Mexico. For example, Prologis Inc., the world’s largest logistics real estate company, has reported a significant increase in demand for industrial space in Mexico. Meanwhile, other investors, such as Morgan Stanley, are focusing on US border towns, where demand for industrial space is also increasing.
While the trend towards reshoring and nearshoring is expected to continue, companies and investors must also know the challenges involved. For example, border crossing, infrastructure, and government regulations can pose significant challenges for companies looking to establish manufacturing operations in these areas. However, with the right approach and proper planning, these challenges can be overcome, and the potential rewards for companies and investors alike are substantial.
In conclusion, the growing demand for industrial real estate in border cities is driving a new industrial real estate Renaissance and presenting a significant opportunity for companies and investors. By establishing manufacturing operations in these areas, companies can take advantage of the benefits of reshoring and nearshoring, while investors can tap into the growing demand for industrial space.